HENRY G BARTHOLOMEW

US MINERALS MANAGEMENT

 SERVICE

S

ince 1953, the Outer Continental

Shelf has produced 10 B bbl of oil,

100 Tcf of natural gas, and $100

billion in government revenues. The

OCS currently supplies 14% of Amer -

ica’s oil and 24% of its natural gas pro -

duction, and last year, it contributed

nearly $3 billion to the US Treasury.

Today the government and the indus -

try face several challenges. Falling pro -

duction and profits have prompted in -

dustrywide cutbacks. Larger producers

are selling older, marginal fields to

lower-cost operators. As a result, the

number of operators has doubled since

1983. Many lack the offshore experience

and financial resources of larger compa -

nies. Also, the infrastructure is ag -

ing—More than a third of the 3,700 off -

shore platforms are over 20 years old and

past or near the end of their design life.

These facts make my topic—“New Di -

rections in US Offshore Regula -

tions”—important for the industry and

important for the US government.

I will touch on 4 topics. The first is the

government’s regulatory objectives, the

principles which underlie our policies.

The second is SEMP, the Safety and

Environmental Management Program,

potentially a big step toward perform -

ance goals and away from prescriptive

regulations. Third, I’ll outline changes in

how we regulate the training of US off -

shore workers. And finally, I’ll outline a

new approach to regulating deep-water

development, a good example of govern -

ment-industry cooperation.

 

Eliminate unsafe behavior

We’re confident that we share with

industry a common goal of safe and pol -

lution-free offshore operations. In pur -

suit of that goal, we have 4 key objec -

tives. First, we want to eliminate unsafe

behavior.

Peter Drucker, the dean of American

management scholars, recently noted

that despite the ongoing transition from

inherently dangerous industrial jobs to

comparatively safe office and service

jobs, American work-place safety has

deteriorated since 1970. He attributes

this paradox to government policies that

identified an unsafe work place as the

primary cause of accidents. Based on

that assumption, the government tried to

do the impossible—create a risk-free

work place. Instead, Mr Drucker argues,

we need to eliminate unsafe behavior.

Technological advances have given

the industry very efficient and very reli -

able tools for finding and producing off -

shore oil and gas. As a result, equipment

alone is rarely the main source of prob -

lems. In most cases, accidents and oil

spills can be traced to human or organ -

izational failures, which are responsible

for up to 80% of all industrial accidents.

And that’s why our top safety priority is

human behavior.

 

Flexible, performance-based rules

Our second objective is a more flexible

regulatory system. MMS safety regula -

tions today focus on the installation, op -

eration, and inspection of equipment.

These regulations have been effective

and have doubtless contributed to the

industry’s outstanding safety and envi -

ronmental record. But they may be too

prescriptive. An overly prescriptive

regulatory system inhibits innovation

and puts too little emphasis on results. It

may be better for MMS to establish per -

formance targets and let the industry find

ways to meet them.

 

Promote continuous improvement

Our third objective is to promote man -

agement systems that encourage con -

tinuous improvement in the industry’s

safety and pollution-prevention prac -

tices. Operating and engineering prac -

tices should be designed for perfection.

But the possibility of design flaws and

human error should be offset by proc -

esses that encourage continuous im -

provement, processes that bring into

play the full range of human ingenuity.

 

Being a partner—not a policeman

Our fourth objective is to create a rela -

tionship with the industry that makes

MMS more of a partner than a police -

man. We need to create an atmosphere

where our mutual and primary concern

is to fix the problem, not the blame. If

we’re successful, the US offshore not

only will be safer and pollution-free, but

enforcement actions and penalties will

become the rare exception.

The industry can and should embrace

these objectives. They’re good public

policy and good business.

 

SEMP: A new paradigm

To move toward our common goal of

cleaner and safer offshore operations,

MMS invented SEMP, the Safety and En -

vironmental Management Program.

SEMP is the second of my 4 topics. SEMP

unifies our 4 regulatory objectives into a

single, comprehensive strategy. SEMP

was devised as a strategy for preventing

accidents and oil spills, rather than merely

reacting to them.

It’s a concept that applies to all off -

shore activities.

Simply put, SEMP is a new paradigm

for managing offshore operations. It’s a

model that offers less regulation, not

more. SEMP requires a commitment to

safety throughout an organiza -

tion—from roughneck to the chairman

of the board. SEMP can reduce substan -

tially the risk of accident and pollution

by changing the industry’s culture and

the way we think about safety.

SEMP is designed to discourage a

compliance mentality in which people

wrongly and dangerously believe that

regulatory compliance equals safety.

 

SEMP elements

 A good SEMP plan will start with top

management’s firm commitment to

safety and pollution prevention. It will

include programs for identifying and

mitigating hazards. It will assure safe

work practices and management-ofchange procedures. It will see that em -

New directions in US offshore

regulations

‘We’re also investigating the feasibility

of third-party accreditation of training institutions.... The IADC

WellCAP program could provide the basis for finally bridging the

intercontinental reciprocity gap’

—Henry G Bartholomew

September 1995 DRILLING CONTRACTOR 31
ployees and contractors are welltrained. It will include procedures for

reviewing accidents and near misses,

and a system for correcting problems.

Lastly, a good SEMP plan will include

procurement poli cies that

strengthen safety practices.

 

What SEMP is not

SEMP is not a paperwork exercise or

an opportunity for bureaucrats to

gather reading material. Nor is SEMP

designed to produce plans that will sit

on a shelf gathering dust. SEMP is not

a strategy to create more regulation and

bureaucracy. To the contrary, SEMP is

intended to simplify US regulations.

And most importantly, SEMP is not

the Safety Case. Much of our motiva -

tion for developing SEMP, of course,

was the Piper Alpha disaster. We stud -

ied the Cullen Report. We met with UK

officials. We met with North Sea and

US industry representatives. We inten -

sively studied the Safety Case. We

reached two conclusions. First, the US

Outer Continental Shelf is not the

North Sea. Second, the Safety Case,

while apparently suitable for the North

Sea, is not needed in the US and we

have no plans to adopt it in here.

 

API RP 75

To date, SEMP has been imple -

mented in accordance with API’s Rec -

ommended Practice 75 (RP 75), which

the industry developed in response to

the MMS call for a new approach to

safety and environmental protection.

MMS has vigorously endorsed RP75

because it contains the essential SEMP

elements.

The findings of an industrywide

SEMP survey conducted by the API

and the Gulf of Mexico Offshore Op -

erators Committee was announced re -

cently at the Offshore Technology

Conference in Houston. The 88 pro -

ducers (111 surveyed) that responded

to the survey accounted for 94% of

OCS production. The survey indicates

that US operators are taking SEMP se -

riously and are either developing or

implementing SEMP plans.

This is a great first step. We hope that

next year’s follow-up survey will show

that every operator has a fully opera -

tional SEMP plan. For our part, MMS

will be promoting SEMP every way we

can. We’ll continue working with the

industry to see that SEMP and RP 75

are implemented quickly, effectively

and painlessly.

To date, the SEMP program has dealt

with producers. RP 75, although de -

signed for production operations and

facilities, is applicable to all offshore

oil and gas activities. RP 75 explicitly

recommends that contractors follow

practices that are consistent with the

operator’s SEMP. So operators work -

ing to a SEMP plan should expect their

contractors to operate under a safe

management plan, too.

For these reasons, I want to encour -

age drilling contractors and the IADC

to join with MMS and US producers:

Adopt SEMP as a standard practice for

drilling operation, and adopt RP 75 as

the benchmark for safety- and environ -

mental-management programs.

 

Re-inventing training regulations

Let me turn now to the third of my 4

topics—worker training regulations.

The Outer Continental Shelf Lands Act

requires MMS to assure that key off -

shore workers are trained to safely per -

form the job to which they’re assigned.

Current regulations prescribe not only

the curriculum, but also the classroom

hours and training format.

While these regulations have proven

reasonably effective, they’re too pre -

scriptive. They limit the flexibility of

school administrators and inhibit the

introduction of new technologies and

innovative training methods. The

MMS is seeking new directions for the

training program. Our long-range goal

is a truly international program where

industry and government together es -

tablish and implement worker-per -

formance standards and training re -

quirements.

The first step in re-inventing worker

training will be to amend our regula -

tions to:

• Reduce the volume of regulatory de -

tail;

• Provide for alternatives to traditional

teaching methods and technologies;

• Encourage operators and contractors

to integrate training into SEMP plans.

We’re also investigating the feasibil -

ity of third-party accreditation of train -

ing institutions. This would shift the

burden of program administration from

the MMS to the third party, while al -

lowing MMS to retain regulatory over -

sight. A third-party accreditation sys -

tem in US also may facilitate an inter -

nationally compatible certification sys -

tem. The IADC WellCAP program

could provide the basis for finally

bridging the intercontinental reciproc -

ity gap.

 

US deep-water potential is high

The last of my 4 topics deals with our

emerging regulatory policy on deepwater development. According to

some, deep-water development may

stimulate a resurgence in the US off -

shore industry. Potential deep water re -

source estimates range from as low as

4 B bbl to as much as 20 B bbl.

From a regulatory perspective, deep

water begins where the industry starts

using non-traditional methods and

technologies to develop and produce

offshore oil and gas. This tends to be at

water depths below 300 m-400 m, with

floating production, tension-leg plat -

forms, and subsea wellheads and facili -

ties.

20 years ago, an MMS team began

examining a range of deep-water regu -

latory issues, including the approval

and use of floating production systems,

certification of TLPs, deep-water pipe -

line designs, gas flaring, extended well

testing and requirements for subsea

production and safety systems. The

team’s baseline determination was that

MMS had encountered no major prob -

lems in reviewing and approving past

deep-water projects. They also found

that it had been necessary to regularly

grant departures from our regulations

in order to approve those projects. De -

partures were needed most often when

equipment or technologies fell outside

the scope of our regulations.

The MMS team worked closely with

the DeepStar Project. DeepStar, led by

Texaco USA, involves 17 multina -

tional oil and gas companies, and a

variety of suppliers and contractors

working to identify and develop tech -

nologies that will make US deep-water

development viable. A key DeepStar

objective was to resolve any regulatory

issues that could impede deep-water

development.

After a top-to-bottom review, the

team recommended revising several

technical regulations. But the most sig -

nificant and far-reaching recommenda -

tion was that MMS take a total systems

approach to regulating deep-water pro -

jects. Future deep-water projects

should be regulated as completed sys -

tems, not piecemeal. Under this ap -

proach, a lessee would prepare a com -

prehensive development and produc -

tion plan for each deep-water project.

This plan, one approved by MMS,

would establish the minimum engi -

neering, safety and pollution-preven -

tion requirements for that project. This

systems approach will initially place

32 DRILLING CONTRACTOR September 1995
more of a planning burden on the opera -

tor and more of review burden on the

MMS. But the net effect should be

highly beneficial to both.

 

New directions

In conclusion, MMS has determined

that a flexible regulatory program, based

upon performance objectives and gov -

ernment-industry cooperation, is far bet -

ter than a more traditional command and

control system, with highly prescriptive

and rigid regulations.

Some say, “If it ain’t broke, don’t fix

it.” The MMS believes, “There’s always

room for improvement.”

 

About the author

Henry G Bartholomew is the Deputy

Associate Director of Operations and

Safety for the US Minerals Management

Service.♦

September 1995 DRILLING CONTRACTOR 33